A Tale of Two Plans

Dan FosterAlternatives are on the rise in Canadian defined benefit pension portfolios according to plan sponsors we interviewed at the 2012 Investment Innovation Conference. These two video interviews (click on the images to watch) show how alternatives playing different roles, as one plan pursues a liability-driven investment strategy and the other pursues a risk-on stance. Panelist, Duncan Burrill, Secretary/Treasurer, CBC Pension Plan, noted that alternatives play a critical role in his organization’s pension plan as it pursues a liability-driven investment strategy with a significant weighting in fixed income. “We need to invest in assets that can help us achieve our return expectations outside fixed income and equities,” he said. Daniel Foster, Investment Manager, United Church of Canada, explained the relatively conservative investment approach of his organization’s pension fund, which he noted is shifting into a “risk on” phase as it seeks returns to make the plan sustainable. “The role of alternatives to date has been fairly minor,” Foster said, although he pointed to the fact that real estate, currently at 5%, will rise to 10% and that the pension fund also has 5% allocated to private debt which will also rise. Click on the images to watch the interviews.

Duncan Burrill